Incentivising growth through differentiation

Lessons from South Korea

Park says South Africa should seek to internalise community responsibility. He suggests starting by “bringing back and rekindling” the value of community and by making better use of its rural and traditional leaders to engage people more directly.

An increased focus on rural development could also address problems that are associated with South Africa’s dual economy, where on the one hand it has a small, high-skilled, high-productivity economy, and on the other hand a large, low-skilled, low-productivity economy. The large, traditional sector, is mostly in rural areas.

“The benefit of rural development policies is that you skill the poor and make them more productive to work in the manufacturing sector,” says Park.

The foundation for South Korea’s successful rural development was laid by the land reform programme, which is considered one of the most successful of its kind. Under the Farmland Reform Act of 1949, government pursued land reform on the principle of ‘compensated forfeiture and non-free distribution’, whereby farmland was bought from landlords at predetermined prices and sold to farmers at below-market prices. The reform ended the past landlord-tenant system and fostered self-employed farmers.

When the Farmland Reform Act was passed in 1949, South Korea was still dominated by conservative members of the landowning class, reluctant to carry out land reform.

However, the Korean War disrupted these vested interests and presented an opportunity for accelerated land reform led by an emerging technocratic and meritocratic leadership.

South Korea’s land reform was rapidly implemented and completed in only ten years. This is in stark contrast to the disappointing results seen by many other developing countries, including South Africa, in their land reform endeavours.

Ajam states that State capacity remains a hurdle to the successful implementation of South Africa’s land reform programme. Progress has been slow and redistributed land has not always been productive.

Fubbs suggests that the land reform challenges in South Africa are so deeply embedded, that had South Africa followed the South Korean model by driving its land reform during a time of crisis, when the country became a democracy in 1994, it may have been easier to implement than it is now.

Park believes South Africa should find a pragmatic way that balances various interests, to resolve the country’s land issues.